Estimating the market effect of a food scare: the case of genetically modified StarLink corn

In 2000, a genetically modified corn variety called StarLink that was not approved for human consumption was discovered in the food-corn supply. To estimate the price impact of this event on the U.S. corn market, we develop the relative price of a substitute method. This method applies not only to t...

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Bibliographic Details
Published in:The review of economics and statistics 2007-08, Vol.89 (3), p.522-533
Main Authors: Carter, C.A, Smith, A
Format: Article
Language:English
Subjects:
Agricultural biotechnology
Agricultural economics
agricultural products
commodity prices
consumer economics
Corn
Corn market
Corn prices
Economic models
Economic theory
Estimation methods
food contamination
food prices
Forecasting models
Genetically altered foods
genetically modified foods
human food chain
literature reviews
Market prices
Price shocks
Relative prices
Sorghum
StarLink corn
Studies
Supply and demand
transgenic plants
Zea mays
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Summary:In 2000, a genetically modified corn variety called StarLink that was not approved for human consumption was discovered in the food-corn supply. To estimate the price impact of this event on the U.S. corn market, we develop the relative price of a substitute method. This method applies not only to the StarLink event but also to rare events in other markets. We find that the contamination led to a 6.8% discount in corn prices and that the suppression of prices lasted for at least a year.
ISSN:0034-6535
1530-9142
DOI:10.1162/rest.89.3.522